Foreign Institutional investors sold more than Rs1.42 lakh cr in Indian market in last 4 months; Will FIIs selling halt post Budget?

Among many factors, including negative global cues, on thing that has been contributing towards market volatility for the past few months is relentless selling by Foreign Institutional investors (FIIs) in the Indian stock market. FIIs have now remained net sellers in the Indian market for the last four months in a row.

It all began with October 2021 when FIIs sold Rs -25,572.19 in the Indian stock markets. It was followed by Rs 39,901.92 crore in November 2021, Rs 35,493.59 crore in December 2021. In January 2022, the Foreign Institutional investors sold massive Rs 41,346.35. Earlier, in September 2021, the FIIs showed some buying interest as they turned net buyers to the tune of Rs 913.77 crore.  Domestic Institutional Investors were net sellers with Rs 21,928.40 crore in January. 

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Collectively, in the last four months, FIIs sold to the tune of Rs 1, 42,314.05 crore in the domestic markets. 

With FM Nirmala Sitharaman hiking Capex by nearly 35% and focus shifting on digitization of infra digital currency, expert is of the view that FIIs selling will moderate going forward.  

Piyush Nagda, Head - Investment Products, Prabhudas Lilladher, said FIIs selling will moderate after budget. "It is a growth-oriented budget with life time high capital expenditure which will help large caps in BFSI and Capital Goods sector to consolidate and attract buying."  

He said announcements on creation of digital infra, issuance of digital currency, digitization of Government processes, Data centres getting industry status will attract lot of foreign money in companies in IT infra sector. 

"With geopolitical events like faster than expected rate hikes, Feb tapering, soaring bond yields, mounting inflation, profit booking, overvaluation scenario, rising crude prices and Russia-Ukraine tension are no doubt spoiling equity’s party. Various brokerage houses have downgraded Indian Equities Market and this has propelled foreign investors to search for better risk-reward elsewhere. So, foreign investors have pumped out Rs 1,32,972.36 odd Crores  on net basis from domestic markets since Jan 2021," says Ankur Saraswat, research analyst at Trustline securities

No doubt, the latest Union Budget will provide more clarity from the government side going aheadsaid Ankur, adding that continuous selling pressure may persist for some time period and consequently, financial markets may slide further irrespective of budget.